Thursday, February 10, 2011


Home sales numbers being reported by the National Association of Realtors are being disputed by First American CoreLogic, a data aggregator for the title insurance industry.

At issue:  NAR reported that real estate sales in 2010 fell about 5%, to 4.9 million, while CoreLogic contends that there were only about 3.6 million completed sales last year.

The dispute is relevant because having accurate information about the current pace of sales is critical when determining how much excess inventory exists in the US housing market.  It also indicates how long it will take for demand to catch up with supply, so a 30% overstatement (as CoreLogic contends) means that prices may be slower to recover and that the current national downtown may last even longer than has been forecast.

Based on CoreLogic's numbers, the nation's overall inventory of unsold houses stands at 16 months, while NAR reports an overall inventory of about 9.5 months.  Here in Denver, our inventory of unsold homes is just over seven months.

CoreLogic argues that NAR's methodology for reporting home sales has not been updated since 2004, and with many MLS systems consolidating and a much smaller percentage of For Sale By Owner transactions, NAR's calculation formulas are out of date.  In Colorado, for example, many of our MLS systems began sharing data in 2009, meaning that the same home sold in Denver could be reported as a sale in the Denver MLS, the Northern Colorado MLS, and the Pikes Peak (Colorado Springs) MLS, which could be interpreted as three sales when only one actually occured.  

NAR is defending its numbers and its methodology, but it will be interesting to see where this goes.  The truth is that what matters most is what happens locally, and our market continues to show more strength than is seen in national averages.  But a slower real estate market does impact the overall economy, and if there are distortions in the numbers being reported by NAR, they need to be corrected.